Malta’s draft budgetary plans ‘broadly compliant’ with Stability and Growth Pact

Along with Belgium, Finland and Latvia, the European Commission has found Malta’s draft budgetary plan for 2016 to be “broadly compliant” with the provisions of the Stability and Growth Pact.

“For these countries, the plans might result in some deviation from the adjustment paths towards each country's Medium-Term budgetary Objective,” the European Commission said in an Opinion adopted today.

With these Opinions, the Commission assesses the compliance of the Draft Budgetary Plans for the following year with the provision of the Stability and Growth Pact (SGP). No DBP for 2016 has been found in particularly serious non-compliance. In several cases, however, the Commission finds that the planned fiscal adjustments fall short, or risk doing so, of what is required by the SGP.

In addition to the country-specific analyses, and based on the Member States' budgetary plans, the Commission assessed the budgetary situation and fiscal stance in the euro area as a whole.

According to the Ministry for Finance, the European Commission was of the opinion that Malta’s growth rate of government expenditure is line with the applicable expenditure benchmark. Furthermore, Malta’s decreasing debt ratio is also expected to meet the EU debt rule.

The Commission expressed its satisfaction with Malta’s fiscal efforts and is positive about Malta’s ability to reach its fiscal targets.

According to the Commission, the deficit is expected to fall to 1.7% in 2015 and to 1.2% in 2016. The Commission is expecting the debt ratio to fall to 65.2% in 2015 and to 63.2% in 2016. These are in line with the targets projected by Malta.

“The Commission confirms Malta’s buoyant economic performance in 2015 and describes the macroeconomic scenario for 2015 and 2016 as plausible,” the Ministry said in a reaction.

The Commission also confirmed that Malta had the lower tax burden on labour, also on the back of the lowering income tax rates announced in the last three Budgets.

“The Government has every reason to be delighted that its 2016 Budget is compliant, as are its expenditure, deficit and debt trajectories,” Finance Minister Edward Scicluna said.